Dogfish Head Merges With Boston Beer Co.

BOSTON — Two of the largest craft-beer brewers in the United States have signed a definitive merger agreement.

The combination of the Boston Beer Co. and Dogfish Head Brewery brings together two independent craft breweries and two founders and brewers, Jim Koch and Sam Calagione (pictured above).

“Together, Boston Beer and Dogfish Head will create a powerful American-owned platform for craft beer and beyond,” the companies said.

Boston Beer Co. is the second-largest craft brewer in the United States, according to the Brewers Association, and Dogfish Head is No. 12.

The new entity will have more than half a century of craft-brewing expertise, a portfolio of leading beer and “beyond beer” brands at high-end price points, and industry leadership in innovation and quality, they said. Following the transaction, the combined company will have a leading position in the high end of the U.S. beer market, bringing together Boston Beer’s craft-beer portfolio and top-ranked sales team with Dogfish Head’s award-winning portfolio of IPA and session sour brands.

“We believe we are creating the most dynamic and diverse American-owned platform for craft beer and beyond,” said Jim Koch, founder and chairman of The Boston Beer Co. “Dogfish Head has a proud history as a craft-beer pioneer with a brand that is beloved by American consumers and highly respected by the industry.”

The combined company will maintain its status as an independent craft brewery, as defined by the Brewers Association. It will be better positioned to compete against the global beer conglomerates within the craft beer category that are 50 and 100 times its size, while still representing less than 2% of beer sold in the United States.

“Not only are Dogfish Head and Boston Beer two original American breweries, but Jim Koch and I worked hard with other leading craft-brewery founders and the Brewers Association to develop and champion what defines independent American brewers,” said Sam Calagione, founder and brewer of Dogfish Head. “This merger better positions Dogfish Head and our co-workers to continue growing within this definition for many years to come.”

The combined company will be led by Boston Beer CEO Dave Burwick. “This is a formidable combination of brands, incredible brewing talent and leaders who remain 100% focused and committed to the long-term health of our breweries and growing the beer industry," he said. "United, we will have the highest quality, most distinct, high-end portfolio, from both a price-point and product perspective with the top-ranked sales organization to bring it to market. We expect that we’ll see more consolidation in the craft industry over time, and we’ll be in the best position to take advantage of those changes.”

The transaction is expected to close late in second-quarter 2019, subject to customary closing conditions. Calagione and his family will receive approximately 406,000 shares of Boston Beer stock based on a share price of $314.60. Dogfish Head shareholders will also receive $173 million in cash, most all of which is for the benefit of Dogfish Head’s financial investors, with the exception of certain transaction-related expenses.

Dogfish Head is on pace to sell nearly 300,000 barrels for the full year 2019, which would represent high single-digit growth vs. the prior full year. Net sales for the full year 2019 are expected to be $110 million to $120 million. Dogfish Head employs approximately 400 employees, produces most of its beer at its brewery in Milton, Del., and sells its beer in more than 40 states. Boston-based Boston Beer plans to consolidate Dogfish Head results into Boston Beer’s financial results beginning late in second-quarter 2019, and Boston Beer estimates that the transaction will be neutral to slightly accretive in 2019 and will not have a material impact on full-year 2019 earnings per diluted share.